Are you interested in investing in real estate but unsure where to start? Two popular strategies for real estate investing are land flipping and wholesaling.
Both can be lucrative, but they differ in their approach and the types of properties they deal with.
So what’s the difference, exactly? That’s why we’re here. Today, we dive into land flipping vs wholesaling.
Understanding Land Flipping
If you’re looking to enter the real estate market, land flipping could be your ticket.
To help you get started, we’ll cover the basics of land flipping, the benefits of this strategy, and some of the risks and challenges you may encounter.
Basics of Land Flipping
Land flipping is the process of buying land at a low price and then selling it for a profit. This can be done by finding motivated sellers who are willing to sell their land for less than its market value.
Once you have identified a potential deal, you will need to conduct due diligence to ensure that the land is suitable for your needs.
One of the key advantages of land flipping is that it requires relatively little capital to get started, especially since here at LandVerse we offer deal funding.
You don’t need to worry about repairs, renovations, or dealing with tenants. Instead, you can focus on finding the right deals and reselling them for a profit.
Unlike traditional real estate investing, land flipping focuses exclusively on raw and vacant land. Land flippers purchase land for below market value, usually around 40-60% of its market value.
This lower acquisition cost leads to a higher potential profit percentage on the sale end. With LandVerse’s course on teaching you how to flip land, you can learn the ins and outs of this exciting investment opportunity.
Benefits of Land Flipping
Land flipping has several benefits that make it an attractive option for real estate investors. For one, it can be a relatively low-risk investment strategy.
Unlike other forms of real estate investing, it is easier to do deals remotely.
Another benefit of land flipping is that it can be a flexible investment strategy.
You can choose to focus on a particular geographic area or type of land, depending on your interests and expertise – such as infill lots, or rural recreational properties.
This can help you build a niche in the real estate market and become an expert in a particular area.
Overall, land flipping can be an exciting and profitable investment strategy for those who are willing to put in the time and effort required to succeed.
If you’re interested in learning more about land flipping, consider checking out our Masterclass.
Exploring Wholesaling
Wholesaling is a popular method of real estate investing that involves finding a property, getting it under contract, and then assigning that contract to another investor for a fee.
Here are some of the fundamentals of wholesaling:
Wholesaling Fundamentals
To get started with wholesaling, you’ll need to learn how to find motivated sellers who are willing to sell their properties at a discount.
Usually, these properties are distressed, and so that can lead to various headaches that need to be dealt with.
Oftentimes people are still living in the property, which makes the operations of assigning the contract more challenging.
Motivated sellers can be found using a variety of marketing techniques, such as direct mail campaigns, cold calling, driving for dollars, bandit signs, and networking with other investors.
Once you’ve found a potential deal, you’ll need to negotiate with the seller to get the property under contract at a price that allows you to make a profit.
You’ll then market the property to other investors who are looking for deals, and assign the contract to the highest bidder.
Usually, this is 70% ARV minus your wholesale fee, which stands for “After Repair Value”. This gives enough profit on a deal for an investor to consider looking into it.
Advantages of Wholesaling
One of the biggest advantages of wholesaling is that it can be a quick way to make money in real estate.
Theoretically, this means you can often close deals in a matter of weeks, rather than months.
Wholesaling can also be a great way to build your network of real estate investors.
By working with other investors to find and assign deals, you can build relationships and learn from more experienced investors.
Potential Drawbacks
While wholesaling can be a lucrative way to invest in real estate, it’s not without its drawbacks.
One of the biggest challenges is getting boots on the ground to view a property before getting the contract signed.
This can require a lot of time and effort, especially if you’re just getting started.
Another potential drawback is that wholesaling can be a competitive field.
Because there are relatively low barriers to entry, there can be a lot of other investors vying for the same deals.
This means you’ll need to be prepared to hustle and work hard to find and close deals.
Land Flipping vs. Wholesaling: Comparative Analysis
In this section, we will compare the profitability potential, timeframe, capital, and investment required for land flipping vs wholesaling.
Profitability Potential
Both land flipping and wholesaling have the potential for high profitability. However, land flipping tends to offer higher profit margins.
This is because when you flip land, you can buy it at a lower price and sell it for a higher price on market.
This is because land is less competitive and with our strategies, you take the property to the end user.
On the other hand, when you wholesale, you typically only make a small profit from the difference between the purchase price and the sale price.
Competition
Land is undoubtedly less competitive than traditional wholesaling. Although more land investors are entering the space, it is still early days for the industry.
Although not easy, it is easier to get deals in land. This will be true going into 2024 and beyond.
Strategies for Success
If you’re looking to succeed in land flipping or wholesaling, there are a few key strategies that you should keep in mind.
By following these strategies, you can increase your chances of finding great deals, building relationships with property owners, and ultimately making a profit.
Case Studies and Real-world Examples
Now that you understand the basics of land flipping and wholesaling, let’s take a look at some real-world examples of how these strategies can be used to generate profits.
Case Study 1: Land Flipping
You recently purchased a 10-acre parcel of land for $40,000. After doing some research, you discover that the property is is worth roughly $80,000 on market.
You purchase the property, put it on market with a qualified local broker, and within a month get an offer for $75,000.
You clear roughly $35,000.
Case Study 2: Wholesaling
You find a distressed property in a desirable neighborhood that you believe can be fixed up and sold for a profit.
You negotiate with the owner to purchase the property for $100,000.
You then find a buyer who is willing to purchase the property for $120,000.
You assign the contract to the buyer for a fee of $10,000, netting a profit of $10,000 without ever owning the property.
Comparison
As you can see from these examples, land flipping vs wholesaling, both can be lucrative strategies for generating profits in the real estate industry.
Overall, both land flipping and wholesaling can be effective strategies for generating profits in the real estate industry.
With the right knowledge and skills, you can use these strategies to build a successful career in real estate investing.
If you are interested in checking out more land flips, check out this article on one of our case studies.
Future Outlook and Trends
As the real estate industry continues to evolve, the future of land flipping and wholesaling looks bright.
With the rise of technology, it has never been easier to find and acquire land for investment purposes. Here are some of the future trends that you should know about:
Increased Competition
As more people become aware of the potential profits that can be made from land flipping and wholesaling, the competition will increase.
However, this should not discourage you from pursuing this business. With the right knowledge and skills, you can still thrive in the land investing industry.
When comparing land flipping vs wholesaling, it’s important to note that both spaces will see increased competition. But that is okay!
Greater Emphasis on Marketing & Customer Service
In the future, improved marketing and customer service will play an even more significant role in the success of land-flipping and wholesaling businesses.
Both of these business models are fundamentally marketing and customer service businesses, and the more you can improve those aspects of your business, the better your returns will be.
Continued Education and Learning
The real estate industry is constantly evolving, and you must stay up-to-date with the latest trends and developments.
This means that you will need to continue learning and educating yourself on the latest strategies and techniques for land flipping, wholesaling.
At LandVerse, we offer a course that can teach you everything you need to know to succeed in this industry.
Additionally, feel free to join our free Discord group to connect with other investors.
Conclusion – Land Flipping vs Wholesaling
In conclusion, the future of land flipping and wholesaling looks promising.
By staying up-to-date with the latest trends and developments and continuing to educate yourself, you can succeed in this exciting and profitable industry.
Thank you for reading this article on land flipping vs wholesaling.